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Idaho’s health insurance dispute comes down to the meaning of just 1 word

Idaho Statesman (Boise)

March 09--What does "substantially" mean?

That could be the pivotal question for Idaho, whose chief executives now must justify their plan to let Idahoans buy health insurance in defiance of the Affordable Care Act.

Gov. Butch Otter, Lt. Gov. Brad Little and Idaho Department of Insurance Director Dean Cameron said earlier this year that insurers would be allowed to sell plans that don't comply with the ACA, also known as Obamacare. They called the plans "state-based" insurance.

Those state officials -- relying on legal opinions including those written by lawyers for Blue Cross of Idaho -- believe they are "substantially enforcing" the law.

For one thing, Blue Cross lawyers argue, when Congress said "substantially enforce," it meant that states have "leeway ... to decide sometimes not to enforce." They cite a Supreme Court decision defining "substantially" as "in the main" and not "to a high degree."

But federal health officials on Thursday sent a letter to let Idaho know it was walking in dangerous territory with its "state-based" plans.

The letter from Seema Verma, U.S. Centers for Medicare and Medicaid Services administrator, said in at least five places that Idaho's plan seems to go against "substantially enforcing" the law. It highlighted eight specific aspects of the "state-based" plans that go directly against ACA requirements.

Otter, Little and Cameron on Friday responded to news coverage of the letter, saying that it wasn't "a rejection of our approach" but instead was "an invitation ... to continue discussing the specifics of what can and cannot be included in state-based plans."

Charlene Maher is president and CEO of Blue Cross of Idaho, the first insurer to formally propose insurance plans under the new framework. She said Friday the "decision from CMS is disappointing, but leaves an opening for (Otter and Cameron) to craft a solution to provide access to individual health insurance."

Scroll to the end of this report to read their full statements.

'NOT OUR PREFERENCE' TO STEP IN

The letter was almost apologetic about upholding a law the Trump administration hates, and it offered sympathies to Idaho for its rising insurance premiums. But Verma also warned Otter that Idaho's "state-based" plans gave her "reason to believe that Idaho may not be substantially enforcing provisions of [the ACA]."

Further, any health insurance company that "fails to comply" with the law "may be subject to civil money penalties" that could reach $100 per violation, per day, she wrote.

She wrote that Idaho has 30 days to respond and prove to CMS that it is "substantially enforcing" the law.

When states don't enforce the law, she wrote, the federal government has to step in.

"This is certainly not our preference; we believe that Idaho has options within the law to meaningfully implement many of the policy proposals [issued by Idaho officials], to address the crisis facing the state's individual health insurance market," Verma's letter said.

She pointed to the Trump administration's efforts to promote certain non-ACA plans, such as short-term limited insurance. Cameron has told federal health officials he doesn't think those plans are as good for consumers, or have as many consumer protections built into them, as the "state-based" plans would.

The rest of the letter is a detailed chart contrasting Idaho's plans with what is allowed under federal law.

Under the "state-based" plans, insurers wouldn't have to cover as much of a patient's medical costs. They could charge sick people higher premiums. They could set a steeper price curve between young and old people. And they could cap a customer's medical claims at $1 million a year.

With those changes, healthy customers could see a big drop in premiums -- which the officials promised would lure healthy, middle-class Idahoans back into the insurance pool.

IN THE WORKS FOR A YEAR

The proposal didn't come out of thin air. Otter sent a letter pitching the idea last March to former U.S. Department of Health and Human Services Secretary Tom Price.

"I'm asking that Idaho be granted the flexibility to continue innovating and creating new products under our state law," the letter said. "We believe we can develop products for Idaho consumers that are 30 to 60 percent less expensive than comparable plans under the Affordable Care Act."

Otter listed several of the regulatory changes that Idaho now must defend -- the $1 million annual limit, the higher out-of-pocket costs, the steeper age-based premiums and a return to pre-existing condition denials in some cases.

"One carrier is ready to proceed as soon as they feel comfortable that they will not be penalized," he wrote. "Other carriers are preparing and will quickly follow."